Hornchurch & Upminster MP, Julia Lopez, has expressed her fear that Havering businesses will be pushed over the edge by Labour’s bumper £40 billion Budget tax rises.
The new Labour Chancellor, Rachel Reeves, unveiled her first Budget in parliament on Wednesday, setting out new taxes on education as well as hikes to Inheritance Tax, Capital Gains Tax and employer National Insurance contributions.
Mrs Lopez took to X in the aftermath to ask how £40bn extra in taxes – punishing people who build the businesses, take the risks, employ people and pay for services – is a recipe for growth. Since Wednesday, businesses from across Hornchurch & Upminster have shared their concerns that the measures will lead to them hiking prices, losing staff or shutting down altogether, damaging local high streets and leading to job losses. One childcare provider says that the tax bill for their small business will go up by £5000 per month.
The changes to Employer National Insurance contributions mean employers will now have to start paying NICs on all employees on a salary of more than £5,000 a year rather than the previous £9,100 a year, at an increased rate of 15%. This, coupled with increases to the minimum wage, has left many firms wondering how they will foot the bill.
Changes introduced in the Budget will also see unspent pension pots now subject to Inheritance Tax, hitting those who saved diligently throughout their lives and wished to leave something behind for their loved ones.
One brighter spot, however, was a success in Mrs Lopez’s campaign to keep fuel duty frozen. Ahead of the Budget, she had joined Conservative colleagues in co-signing a letter calling on the Chancellor not to hike taxes on petrol to help families and small businesses. After Mayor Khan expanded ULEZ across wider London, it was feared the rise would pile more misery on motorists in one of London’s more car-dependent boroughs.
Lobbying by Julia and her Parliamentary colleagues proved successful as the Chancellor agreed to keep the freeze and cut in place for another 12 months – though she stopped short of giving certainty beyond that timescale.
People already feeling the pain
These tax rises come amid strong opposition to choices already made by the under-fire Labour Government. In September, the Government announced it would remove the Winter Fuel Payment from all pensioners not in receipt of Pension Credit.
This amounts to removing £300 per year from around 17,000 people across the Hornchurch & Upminster constituency, right as Ofgem announced a rise to the price cap ahead of the winter.
Ahead of the Budget the Chancellor was presented with a petition containing 254 000 signatures calling on the Government to scrap the cut – hundreds of which came from residents in Mrs Lopez’s Hornchurch & Upminster constituency.
Commenting on the Budget, Mrs Lopez said:
“Labour said in the election they did not need to hike taxes to pay for their plans, beyond those they had already announced. We now know this was not true – they have gone on a borrowing and spending spree that makes a mockery of the idea that they are concerned about the state of public finances they inherited.
Many of the taxes on ordinary working people have been disguised by heaping pain on business. Labour may think it's clever politics. But the result will be job losses, higher prices and closures. Along with the inheritance and capital gains tax changes, this approach is all wrong, warping the incentive structure in our economy. It won't work and as they come back for more taxes, the number of people willing to take the risk of starting a business or save for their families will simply get smaller and smaller.”
